The unfettered power of white monopoly capital

President Jacob Zuma this week met with Finance Minister Malusi Gigaba, Deputy Minister Sifiso Buthelezi, Governor of the SA Reserve Bank Lesetja Kganyago, Sars commissioner Tom Moyane and Director-General of the National Treasury Fuzile Lungisa to discuss the impact of the credit rating downgrades and how South Africa should respond. Picture: Elmond Jiyane/GCIS

In the first of a two-part series, Chris Malikane looks at the fight for control of the economy and the forces at the centre of the Struggle.

The first phase of the democratic revolution in South Africa, what we called the “post-1994 breakthrough”, is fast approaching its end. This phase has been characterised by unfettered dominance of white monopoly capital over all levers of power in all spheres of society.

The power of white monopoly capital could be seen in the private sector, in all apparatuses of the state such as government, the universities, the courts, the press, the security forces and political parties.

The strength of white monopoly capital is that it owns and controls South Africa’s resources and it has strong international backers. The dominance of white monopoly capital in the economy determines the nature of the state and society as whole, since the existence of the state is supported by the resources monopolised by white capital.

All the classes that pay taxes are to a large extent dependent on the resources under the control of white monopoly capital. Even the ability of workers to pay taxes depends on the employment they get largely from white monopoly capital.

Employees of the state derive their salaries from state taxes and state borrowing, which ultimately spring from the resources under white monopoly.

Therefore, not only is the state objectively owned and controlled by white monopoly capital, but largely the whole of society is under white monopoly capitalist control. Ideologically, white monopoly capitalists have even started a campaign in which their very existence and relevance is denied.

Defenders of white monopoly capital claim that because many of the companies that dominate the economy are partly owned by pension funds of black workers, white monopoly and control is a fiction.

What these apologists of white domination conveniently forget is that even under apartheid, the pension funds of black workers were used to finance white monopoly capital. Yet it could not be said that black workers owned and controlled the apartheid economy. Indeed, on paper, pension funds are owned largely by workers.

In fact, the control of these funds is monopolised by white-owned asset managers, who have positioned themselves, on the basis of these funds, as “investors”. The wealth of black workers is in the hands of white monopoly capital.

While the post-1994 period deepened and legitimated white monopoly capitalist power, it also expanded the stratum we call the black middle class, which is mainly composed of professionals and black business people. Affirmative action, black economic empowerment through the tender system and the opening up of opportunities in the private sector, are some of the ways in which this class expanded.

However, simultaneously with these advances, there has been a destruction of a section of the middle class: the small shop owners, who have either been reduced to landlords over their properties rented by marginal foreign traders, or have completely shut down because of white monopolisation of the retail sector and the arrival of white-owned retail monopolies in black neighbourhoods.

Large sections of the middle class continue to suffer through lack of implementation of employment equity and affirmative action laws. Furthermore, a large section of the middle class is highly indebted. Its salaries are suppressed, it suffers from the high cost of living brought about by monopoly pricing of goods and services and excessively high interest rates charged by white monopoly capitalist banks.

This section of the black middle class finds itself in small townhouses, with high rental and expensive mortgages, nursing hopes of career advancement, but no prospect of same.

Those sections of the black middle class who are engaged in business activity experience fluctuations in incomes, are economically vulnerable and cannot compete with well-established white companies, who have access to favourable lines of credit from white monopoly capitalist banks and from white networks of suppliers inside the value chains.

There has also been the growth of the black capitalist class. This class grew on the basis of two schemes. The first scheme is based on the tender system of the state, which depends on the financing by white monopoly capital through taxes and borrowing of the state.

This scheme of accumulation is constrained by fiscal policy; it relies on how much government spends on tenders (which itself is a function of how much government taxes white monopoly capital).

That is why the change of the finance minister, together with calls for radical economic transformation, are interpreted by white monopoly capitalist agencies and spokespeople to mean the dawn of reckless spending by government beyond taxes and borrowing capacity, to enrich this tender-based black capitalist class.

The second scheme is through extension of private sector credit in return for shares in white-owned and controlled companies. This scheme is used largely to capture the top leadership of political parties, particularly the leadership of the ruling party.

As long as this political leadership ensured the ruling party does not implement measures that challenge white monopoly capitalist domination and its ownership and control of the state, this corrupt credit-based scheme continued.

The battle that is now raging over the removal of the finance minister in particular is led by white monopoly capital, together with this credit-based black capitalist class, whose ownership and control of the state and the ruling party is being threatened by the rise of the tender-based black capitalist class, which also has links with the leadership of political parties.

White monopoly capitalists are fighting to prevent the “capture” of their state and their control of the ruling party leadership. Only in this way does the term “state capture” make sense - white monopoly capital is preventing the “capture” of its state.

The black working class, especially its overwhelming African majority, remains trapped in squalid conditions. This is the class in which the majority of the South African population is found.

A large section of the black working class has never been employed; it is unemployable within the existing white monopoly capitalist framework; it suffers from ill-health; it is unskilled.

Despite the existence of labour laws, which largely served to remove the brutality of apartheid from the production line, the black working class suffers from centuries-old exploitation and oppression. The sea of the unemployed, who have no form of social security, is the burden of black workers. The largest direct beneficiaries of this centuries-old exploitation of black workers is white monopoly capital and the credit-based black bourgeoisie.

The white working class remains the mass base of white monopoly capital. Long indoctrinated in the ideology of separating its interests from the interest of the black working class, it views struggles against historical injustices as a threat to its livelihood.

Hostile and suspicious of affirmative action and employment equity, it is a “bourgeois working class”, which continues to benefit fromexploitation of the black working class.

Read the second part of this article next week

* Professor Malikane teaches at Wits University’s School of Economic and Business Sciences.

** The views expressed here are not necessarily those of Independent Media.